ANZ's first paycheck from the December sale of its life insurance arm to Zurich has arrived and the bank is considering buying back up to $1.5 billion in shares, on top of its current buyback program.
The bank today updated the market that it has received about $1 billion in reinsurance payments - the first tranche of a $2.85 billion transaction which includes the OnePath Life sale to Zurich.
This results in an increase of about 25 basis points in ANZ's APRA Common Equity Tier 1 Capital.
"Having received the reinsurance proceeds, ANZ will continue to work through its capital management options, which may include an additional on-market buyback of $1 billion to $1.5 billion," ANZ said in its company filings today.
As part of the sale agreement, ANZ and Zurich will enter a 20-year distribution agreement whereby Zurich life insurance products will be offered through ANZ's distribution channels.
ANZ already has a share buyback underway.
On December 18, it announced it would buy back $1.5 million of shares.
In its recent half-year results, ANZ announced an intention to once again neutralise the impact of the Dividend Reinvestment Plan (DRP) through on-market share purchases.
This purchase will run from May 18 to May 31, via a third party. ANZ has confirmed it will not purchase shares for the potential buyback announced today during this two-week period.
In December, ANZ sold its life insurance business for $2.85 billion to Zurich in a move that will make the purchaser Australia's largest retail life insurer.
The sale comprises two transactions, including $1 billion of upfront reinsurance commission from Zurich. At the time, ANZ said the sale was completed "simplification" of its wealth division.
Upon completion, Zurich will own 100% of One Path Life Australia Holdings (OPL), but ANZ will retain its New Zealand business along with its lenders mortgage insurance, general insurance distribution and financial planning arms.
ANZ will confirm its buyback plans after it has analysed alternatives and requisite approvals.